3 Basic Principles of Amazon Repricing

New trends are always popping up in E-Commerce. It can be difficult to weed out the short-term fads from the long-term tactics that can help grow your business for good. One relatively new aspect of marketplace E-Commerce, like Amazon for instance, that is here to stay is repricing.

At times a controversial topic, repricing involves having marketplace sellers (on Amazon, ebay, and more) change their prices up or down, according to the market. Both sellers and buyers are affected by repricing. But how does it really work? Let’s delve into the basics of repricing.

There are Two Types of Repricing

What: Sellers can choose to either manually reprice their products, or employ a repricing software to automatically change their products’ prices for them.

Why: The question is not if sellers will reprice their listings, but when. Since repricing is a given in Amazon selling, sellers will need to decide— based on factors like number of listings, type of listings, and number of employees— just which of the two repricing methods they will use.

How: Manual repricing can be quite time consuming, with some sellers citing several hours per day or week lost due to manual repricing. Therefore manual repricing comes in handy when a seller has few listings. For sellers with a larger number of listings, or who simply want to save time, an automated repricer is the way to go.

There are Three Fundamental Strategies for Repricing

What: Within an automated repricer, there are three types of strategies that a seller can implement: algorithmic, custom, or a combination of both. Keep in mind that not all repricers offer the ability to use more than one of these strategies.

Why: Depending on the type of listing being sold, a seller may have a different set of goals. For example, do they want to liquidate or sell at the highest profit margin? Each strategy allows for a different type of sale outcome.

How: Algorithmic strategies are not customizable and only have one goal in mind, for example— obtaining the Buy Box on Amazon. In this case, the repricer would focus on getting all listings assigned to the algorithmic strategy within the Buy Box. Custom strategies allow the seller to set rules based on the outcome they want. For instance, if an FBA seller on Amazon would like to sell at the highest profit margin possible, he or she would set rules to not compete against sellers that would bring their prices down, like a merchant fulfilled seller with a lower feedback rating. Having the option to use one or switch between the two strategies provides the ideal foundation for a pricing strategy.

Minimum & Maximum Prices are Crucial

What: A minimum price refers to the lowest price a seller is willing to make a sale at. Conversely, a maximum price is the target threshold for which a seller would like to realistically make a sale at the highest profit margin.

Why: Whether or not a seller chooses to reprice manually or automatically, without setting a minimum price, the seller won’t know just how low they can set their products’ prices without having to worry about making a profit. This becomes very important for those who choose to reprice manually, since they will need to keep a very detailed history of their prices.

How: With an automated repricer, sellers must still assign a minimum price to all of their listings so that the repricer knows to never drop a listing’s price below the seller’s designated minimum. In fact, a repricer shouldn’t even begin to work unless all minimum prices are correctly entered into the system. Maximum prices are not always required by a repricer, and certainly not for those choosing to reprice manually. However, by going the extra mile and setting maximum prices in addition to minimum prices for all listings, sellers actually give the repricer a ceiling to jump to, rather than having the market dictate the maximum price. Contrary to some peoples’ beliefs, repricers don’t only reprice listings down; often times, a tool will reprice upwards, especially when there is a set maximum price to strive for.

Having a good understanding of minimum and maximum price formulation, along with the possible repricing strategies, makes for an ideal Amazon-selling framework. These principles set sellers up for a successful pricing strategy, which allows for the chance to win more buy boxes and sales.